Types of international business

Merchandise exports are goods sent out of a country whereas merchan­dise imports are goods brought in. Since these are tangible goods that visibly leave and enter countries, they are sometimes referred to as visible exports and imports. The terms exports or imports are used frequently yet in reality the reference is only to the merchandise exports or imports.

Exporting and importing of goods are the major sources of international revenue and expenditure for most countries. Among companies engaged in some form of international business, more are involvedin importing and exporting than in any other type of transaction.

Importing and/or exporting is usually but not always, the first type of foreign operations in which a firm gets involved. This is because at an early stage of international involvement these operations usually take the least commitment and least risk of a firm's resources Exporting or importing are not typically abandoned when firms adopt other international business forms. Although this may sometimes occur, exporting and importing usually continue, either by business with other markets or to complement the new types of business activities.

Service exports and imports refer to international earnings other than those from goods sent to another country. Receipt of these earnings is considered a service export, whereas payment is considered a service import. Services are also referred to as invisibles. International business comprises many different types of services.

Travel, tourism, and transportation. Earnings from transportation and from foreign travel can be an important source of revenue for international airlines, shipping companies, reservations agencies, and hotels. On a national level, such countries as Greece and Norway depend heavily on revenue collected from carrying foreign cargo on their ships. The Bahamas earns much more from foreign tourists than it earns from exporting merchandise.

Performance of activities abroad. Fees are payments for the performance of certain activities abroad, such services as banking, insurance, rentals (e.g., the Star Wars film), engineering, and management. Engineering services are often handled through turn-key operations, contracts for the construction of operating facilities that are transferred to the owner when the facilities are ready to begin operations. Fees for management services are often the result of management contracts, arrangements through which one firm provides management personnel to perform general or specialized management func­tions for another firm.

Use of assets from abroad. Royalties are the payment for use of assets from abroad, such as for trademarks, patents, copyrights, or other expertise under contracts known as licensing agreements. Royalties are also paid for franchising, a way of doing business in which one party (the franchisor) sells an independent party (the franchisee) the use of a trademark that is an essential asset for the franchisee's business. In addition, the franchisor assists on a continuing basis in the operation of the business, such as by providing components, managerial services, or technology.

Firms often move to foreign licensing or franchising after successfully building exports to a market. This move usually involves a greater interna­tional commitment than in the early stages of exporting. The greater involve­ment occurs because the firm commonly has to send technicians to the foreign country to assist the licensee or franchisee in establishing and adapting its production facilities for the new product.

Direct investments. Direct investment takes place when control follows the investment. This can amount to a small percentage of the equity of the company being acquired, perhaps even as little as 10 percent. The ownership of a controlling interest in a foreign operation is the highest type of commitment to foreign operations in the given country. Direct investment operations may be set up in order to gain access to certain resources or access to a market for the firm’s product.

When two or more organizations share in the ownership of a direct investment, the operation is known as a joint venture. In a special type of joint venture, a mixed venture, a government is in partnership with a private company.

The multinational enterprise, or MNE, has a worldwide approach to foreign markets and production and an integrated global philosophy encompassing both domestic and overseas operations. The term multinational corporation, or MNC, is also quite common in the literature of international business. Another term sometimes used interchangeably with MNE, especially by the United Nations, is transnational corporation, or TNC.

Ex.10. Translate the following into English.

Индивидуальные усилия; не достигают успеха; достичь цели; неспособные выполнить; относительно рано; первичный элемент; в своей первой попытке; отвечать потребностям; деятельность, которая поддерживает; сеть отношений; способствовать сотрудничеству; официальное признание; от своего имени; обладать властью; выполнять обязанности; официально признан; необходимость разделить работу; обозначается термином; процесс передачи обязательств; от выше стоящего к подчиненному; не может существовать и процветать; иерархическая организация; составляют основные компоненты; управленческий инструмент; разделение по функциям; которые сталкивались с необходимостью; большие скопления ресурсов.

Ex.11. Add an appropriate preposition to each of the following sentences where indicated.

Organizational controls

An organization can best achieve its objectives when its members require a minimum... supervision because they are competent and goal-oriented. Nevertheless, even... optimal conditions of individual commitment and self-control, organizations need formal controls. The control function of organizations consists... the following:

1.Establishing standards... which all aspects of organizational life are evaluated.

Most organizations have formal standards relating... spending, production, sales, product quality, safety, inventory, personnel selection, acceptable employee behavior, and so forth.

2. Establishing feedback system by which actual performance is compared... predetermined standards.

These are best exemplified... management reports which show, often... a daily basis, expected and actual performance.

3. Taking appropriate action to ensure that substandard performance is improved and that standards will be met... the future.

It is common practice to refer... the standards and feedback systems as controls although it should be obvious that they serve a control function only if managerial action is involved. They are not a substitute... supervision, but they minimize requirements for personal supervision.

Read the text once again and answer the following question: What are the control functions of organization?

Ex.12. Read the text. Fill in the gaps with the missing words given below.

Monitor, interrelate, integral, report, exaggerate, law, impact, flow of cash, resources, customers, stock, range, information, activity, prerequisite, process, subject, nervous.

Communication in organization

Effective communication is a... for the achievement of organizational objectives. The importance of communication problems has at times been... —there are, after all, other types of problems—but the... of poor communication can be enormous.

The … of communication is illusive because it is intertwined with so many other subjects. Effective communication is, for example, an … part of effective leadership, decision making, motivation, the management organizational conflict, etc.

Communication in organization is here defined as the process by which … is transmitted from one person to another.

Money is the lifeblood of an organization: if organizations do not receive a...... they go out of business. Information plays a similar role. The flow of facts, figures and words through an organization’s administration is its … system.

The nature and flow of information determines how «sensitive» an organization to its..., employees, changes in the market, and so on. The purpose in... information is to plan, record, control and report the activities of the organization.

Planning. Managers need information to be able to plan how an organization’s … are to be used. This can be a complex process since each department’s plan must... with the other departments.

Recording. Firms are obliged to keep financial information under the ….

Controlling. There are many activities in business where immediate or «real time» information is necessary so that the … can be controlled directly. These activities include... control, quality control, and budgetary control.

Reporting. Many different kinds of … exist in business. They... from weekly sales reports to financial reports at an Annual General Meeting. Every function within an organization is constantly... and reported on.

Read the text once again and summarize it in 5-7 sentences.

Ex. 13. Open the brackets.

Economic Individualism – Laissez-Faire

In the late seventeenth century, Louis XIV (to reign) as King of France. His finance minister, Jean Baptiste Colbert, (to ask) a manufacturer by the name of Legendre how the government might (to help) business. Legendre’s reply (to be) “laissez nous faire” (leave us alone). The expression (to become) a watchword and motto of market economy.

Today we (to interpret) laissez-faire ( to mean) that absence of government intervention (to lead) to economic individualism and economic freedom. Under laissez-faire conditions, people’s economic activities (to be) their own private affairs. As consumers, they (to be) free (to spend) their incomes as they (to choose). As producers, they (to be) free (to purchase) the economic resources they (to desire) and (to use) these resources as they (to wish).

In reality, economic freedom (to be subject) almost always to restraints imposed by society for the protection and general welfare of its citizens. Prohibitions against force and fraud (to be) examples. Can you (to give) some others? Can you (to explain) why such restraints (to be) necessary?

Read the text once again and answer the questions at the end of the text.

Ex.14. Insert the missing words given below. Don’t forget about Grammar.

Organization, to adopt, carefully, change, input, condition, service, decision making, harmony, turbulent, adapt, output.

In order to be successful the organization must... with the environment because it supplies the organization with... (in the form of resources, information, and so forth) that are necessary for the determination of the kinds of the products and... to be produced. It also receives the... (product and services) produced by the organization. To maintain this... with the environment, the organization must... define and maintain a boundary system capable of gathering the necessary inputs for effective...... and... and for distributing organizational outputs.

Today’s organization exists in a... environment characterized by what has been termed as discontinuous....If it is to survive and prosper, the organization must be capable of adjusting all of its component parts to... for this change. Additionally, it must... a philosophy and strategy to support the process of adaptation and change.

Ex.15. Make up the sentences. Put them down into notebooks. The beginning of each sentence is given to you.

When negotiations fail, impartial, third, are, often, however, parties, brought, to help, the dispute, settle, in. This may be, arbitration, or, mediation, the form, conciliation, in, of. Conciliation, try, their, means, a third, disagreement, together, will, party, that, to bring, to work out, on their own, management, and, labour. Mediation, it, setting, for, suggestions, make, and, the dispute, of, who, listen to, will, both, sides, by, party, requires, the third, involvement, greater. The suggestions, will, management, or, on, either, labour, binding, not, however, be. Under arbitration, binding, and, a third, hand down, that, is, party, final, listen to, will, both, (an arbitrator), a decision, sides, and.

Ex. 16. Give theEnglish equivalents to the following.

Неспособны выполнить задания, которые требуют не только индивидуальных усилий; групповая деятельность может быть направлена на более высокие, более сложные цели; все эти элементы, взятые вместе, рассматриваются как организация; организации были созданы для того, чтобы помочь индивиду достичь больше; цели должны отвечать потребностям, которые общество определило как важные; организации могут быть сгруппированы по типу деловой активности; партнерство создается по соглашению; владельцы корпораций называются акционерами; эффективная коммуникация – предпосылка успеха в бизнесе; информация помогает быть чувствительными к покупателям, служащим, изменениям на рынке; каждая организация стремится иметь собственный, особенный климат; культурные ценности – это мощный стратегический инструмент; среднестатистический работник имеет высокий потенциал развития; прежде всего работник ищет безопасности и избегает ответственности.

Ex 17. Render the following text into English.

СЕМЬ ЗАПОВЕДЕЙ БИЗНЕСМЕНА

Давать обещания и не выполнять их стало у нас просто нормой жизни. В этой связи полезно вспомнить 1912 год, когда российскими предпринимателями было выработано семь основных принципов ведения дел:

Первый принцип – «Уважай власть». Власть – необходимое условие для эффективного ведения дел. Во всем должен быть порядок. В связи с этим проявляй уважение к блюстителям порядка в узаконенных эшелонах власти.

Второй принцип – «Будь честен и правдив». Это – фундамент предпринимательства, предпосылка здоровой прибыли и нормальных отношений в делах. Российский предприниматель должен быть безупречным носителем добродетелей, честности и правдивости.

Третий принцип – «Уважай право частной собственности». Свободное предпринимательство – основа благополучия государства. Российский предприниматель обязан в поте лица своего трудиться на благо свой Отчизны. Такое рвение можно проявить только при опоре на частную собственность.

Четвертый принцип – «Люби и уважай человека». Любовь и уважение к человеку труда со стороны предпринимателя порождает ответную любовь и уважение. В таких условиях возникает гармония интересов, что создает атмосферу для развития у людей самых разнообразных способностей, побуждает их проявлять себя во всем блеске.

Пятый принцип – «Будь верен своему слову». Успех в деле во многом зависит от того, в какой степени окружающие доверяют тебе.

Шестой принцип – «Живи по средствам». Не зарывайся. Выбирай дело по плечу. Всегда оценивай свои возможности. Действуй сообразно своим средствам.

Седьмой принцип – «Будь целеустремленным». Всегда имей перед собой ясную цель. Предпринимателю такая цель нужна как воздух. Не отвлекайся на другие цели. Служение двум господам противоестественно. В стремлении заветной достичь цели не переходи грани дозволенного. Никакая цель не может затмить моральные ценности.

Ex.18. Translate the text in written form.

Business is the exchange of goods and services, and money, on an arm’s length (objective) basis, that results in mutual benefit or profit for both parties involved. An individual engages in business because he or she believes that the rewards, or possible future benefits, of business are greater than risks, or possible future sacrifices, of business.

Business activities are events that involve making and carrying out the operating, investing, and financing decisions that deal with business assets or obligations.

In a profit-seeking business, there are three types of business activities that correspond to the three types of business decisions. Operating activities are the profit-making activities of the enterprise. They include those business activities that generate revenues, such as selling merchandise for cash or on credit or providing services for a fee. They also include activities that result in increased expenses, such as purchasing goods for manufacture or resale, paying wages, or combining goods and labour to manufacture products.

Investing activities include the purchase and a sale of long-term assets in addition to other major items used in a business’ operations.

Financing activities are activities that involve obtaining the cash or using other non-cash means to pay for investments in long-term assets, and to repay money borrowed from creditors, and to provide a return to owners.

SPEAK AND WRITE

1. Why are there so many organizations in today’s society?

2. Why is it important for managers to be knowledgeable about the macro environment?

3. How will tomorrow’s organizations be different from those today?

4. Do all organizations need structure? Give your reasons.

5. Define the terms authority and tell how it is related to formal and informal organizations.

6. Explain how responsibility, authority, and accountability should be related to each other in the ideal organization.

7. Take an organization with which you are familiar and see if you can explain the way it works (principles, goals, structure, objectives, climate, and so forth).

8. List each organization you belong to. Do they have any impact on your life? List and discuss each impact.

9. One successful sales company had a unique organization layout. At the top of the chart was the most important person in the whole operation – the customer. This labeled «customer» was linked with lines to boxes of functions dealing directly with the customer – sales person, technical service, order clerk, credit clerk, etc. Try to draw your own organization chart, starting with the customer.

10. Enumerate all the factors you would consider in creating a culture of your own business.

11. Because of its broad global environment, a number of disciplines (geography, history, law, economics, political science, anthropology) are useful to help explain the conduct of international business. Prove it with your own examples.

12. Do you agree with the adage: “You can’t get rich working for someone else”?

13. What should be regulated by government and what should be left to the private sector (education, health care, housing, social security, defense, public transport, sale of alcohol, tobacco, press, broadcasting, entertainment)? Why? Give your reasons.

14. Summarize the information of the Unit to be ready to speak on the topic “Organization”. The first step to be done is to write the plan of your future report.

15. Choose any question (problem, topic) relating to Organization and make a 7-10 minute report in class. Refer to different additional sources to make your report instructive, interesting and informative.

UNIT 3

MANAGEMENT

If the leader is good, the followers will be good.

Your vocabulary

Management

- the control and organizing of a business or other organization;

- those stuff within the firm who exert control over its activities on behalf of owners.

Top management

includes the chief executive of an organization, his or her deputy or deputies, the board of directors and the managers in charge of the divisions or departments of the organization.

Middle management

consists of the managers to whom top management delegates the day-to-day running of the organization.

Managing director

- company director responsible for the day-to-day running of a company. Second in the hierarchy only to the chairman, if there is one; the managing director is the company’s chief executive.

Manager

- a person controlling or administrating a business or part of a business.

Ex. 1. Do you know the meaning of the following derivatives? Show it with the help of your own sentences.

to manage; manageable; management; manager; manageress; managerial.

Translate the following sentences. Pay attention to the words in italics.

1. The reserved the right to make managerial decision.

2. What you need is advice from your bank manager.

3. I wish you could manage the time to come and to talk to us.

4. Private banks are being nationalized, and are to be managed with workers’ participation.

5. They are part of my management team.

6. The baby can be greatly influenced by the parents’ management.

7. She has been working as the manageress of a bookshop.

8. It is perfectly manageable task to tackle systematically.

Ex. 2. Write down a synonym for each of the words on the left. Choose the one on the right. In what do they differ?

Choice objective current predict happen handle influence posses grant get

affect present own target process option give obtain foresee occur

Ex. 3. The following words can be classified into 5 groups. What are they? Show the difference in their meaning with the help of your own sentences.

Choice, have, solve, dilemma, own, profit, posses, variant, cope with, to process, option, tackle, problem, handle, return, predicament, gain, alternative.

Ex. 4. Match the definitions with the words given below.

Fee, executive, insure, skill, capacity, profile, applicant, charisma, ensure, guideline, superior.

1. Ability to do something well.

2. Short biographical or character sketch.

3. Payment made for professional advice or services.

4. Person or body with managerial or administrative responsibility.

5. Make certain.

6. Secure compensation in the event of loss or damage by advance regular payments.

7. In a higher position; of higher rank.

8. Principle directing action.

9. Power to certain, receive, experience, or produce.

10. The ability to attract, influence, and inspire people by your personal qualities.

11. Someone who formally asks to be given something, such as a job or a place at a college or university.

Ex. 5. Give the Russian equivalents to the following.

Involved in management; production oriented; impose regulations, ever-more-complex environment; encompasses both science and art; business executives; code of conduct; develop the body of knowledge; with respect to the second criterion; the issue is much less clear-out; is consistent with their interest; self-interest or concern for others; decision-making machinery; cross-cultural skills; consulting fee; character attributes; compare against the places set earlier; authority.

Ex. 6. Translate the following text into Russian in written form.

People working for a company are referred as its workforce, employees, staff, or personnel and are on its payroll.

In some context, especially more conservative ones, employees and workforce refer to those working on the shopfloor of a factory actually making things. Similarly, staff is sometimes used to refer only to managers and office-based workers. This traditional division is also found in the expressions white-collar and blue-collar.

Another traditional division is that between management and labor.

Personnel departments are usually involved in finding new staff and recruiting them, hiring them, or taking them on, in a process of recruitment. Someone recruited is a recruit, or in American English only, a hire.

They are also involved when people are made to leave the organization, or fired. These responsibilities are referred to, relatively informally, as hiring and firing. If you leave the job voluntarily, you quit.

Middle-managers are now most often mentioned in the context of re-engineering, delaying, downsizing, or rightsizing: all these expressions describe the recent trend for companies to reduce the numbers of people they employ, often by getting rid of layers of managers from the middle of hierarchy.

An organization that has undergone this process is lean and its hierarchy is flat.

Read the text once again and in turn explain, in your own words, the meaning of the following terms:

1. workforce, employee, staff, personnel, a recruit, a hire, layer, labour.

2. white-collar, blue-collar.

3. to recruit, to employ, to hire.

4. to fire, to quit, to get rid of.

Do you know any other synonyms to the words given above?

LET’S READ AND TALK

T E X T 1

ART OR SCIENCE?

Management is the art and science of making appropriate choices. To one degree or another, we are all involved in managing and are constantly making decisions concerning how to spend or use our resources.

Like most things in our modern, changing world, the func­tion of management is becoming more complex. The role of the manager today is much different from what itwas one hundred years, fifty years or even twenty-five years ago. At the turn of the century, for example, the business manager's objective was to keep his company running and to make a profit. Most firms were production oriented. Few constraints affected management's decisions. Governmental agencies imposed little regulations on business. The modern manager must now consider the environment in which the organisation operates and be prepared to adopt a wider perspective. That is, the manager must have a good understanding of management principles, an appreciation of the current issues and broader objectives of the total economic poli­tical, social, and ecological system in which we live, and he must posses the ability to analyze complex problems.

The modern manager must be sensitive, and responsive tothe environment - thatis he should recognize andbe able to evaluate the needs of the total context in which his business functions, and he should act in accord with his understanding.

Modern management must posses the ability to interact in an ever-more-complex environment and to make decisions that will allocate scarce resources effectively. A major part of the manager’s job will be to predict what the environment needs and what changes will occur in the future.

Organizations exist to combine human efforts in order to achieve certain goals. Management is the process by which these human efforts are combined with each other and with material resources. Management encompasses both science and art. In design­ing and constructing plans and products, management must draw on technology and physical science, of course, and, the behavioral sciences also can contribute to management. However much you hear about "scientific management" or "management science", in handling people aid managing organizations it is necessary to draw on intuition and subjective judgment. The science por­tion of management is expanding, more and more decisions can be analyzed and programmed, particularly with mathematics. But although the artistic side of management may be declining in its proportion of the whole process it will remain central and critical portion of your future jobs. In short:

· Knowledge (science) without skill (art) is useless, or dangerous;

· Skill (art) without knowledge (science) means stagnancy and inability to pass on learning;

Like the physician, the manager is a practitioner. As the doctor draws on basic sciences of chemistry, biology, and physiology, the business executive draws on the sciences of mathematics, psychology, and sociology.

1. The function of management is becoming more complex. Why?

2. What must management possess nowadays?

3. Management encompasses both science and art. In what can we see it?

T E X T 2

PRINCIPLES OF THE MANAGEMENT

Different scholars offer different sets of principles of management. The most famous are the following fourteen. But the main principle should be read as follows: "there is nothing rigid or absolute in management affairs, it is all a question of proportion." Accordingly if you view the following list of these principles as a set of important topics and sometimes applicable guidelines for managers, you will be keeping close to the spirit in which they were originally suggested.

1. Division of work. Within limits, reduction in the number of tasks a worker performs or the number of responsibilities a manger has can increase skill and performance.

2. Authority. Authority is the right to give orders and enforce them with reward or penalty. Responsibility is accountability for results. The two should be balanced, neither exceeding nor being less than the other.

3. Discipline. Discipline is the condition of compliance and commitment that results from the network of stated or implied understandings between employees and managers. Discipline is mostly a result of the ability of leadership. It depends upon good supervisors at all levels making and keeping clear and fair agreements concerning work.

4. Unity of command. Each employee should receive orders from one superior only.

5. Unity of direction. One manager and one plan for each group of activities having the same objective is necessary to coordinate, unify, and focus action.

6. Subordination of individual interests to general interest. Ignorance, ambition, selfishness, laziness, weakness, and all human passion tend to cause self-serving instead of organization-serving behavior on the job. Managers need to find ways to reconcile these interests by setting a good example and supervising firmly and fairly.

7. Remuneration of personnel. Various methods of payment may be suitable, but amounts should reflect economic conditions and be administered to reward well-directed effort.

8. Centralization. Like other organisms, organizations need direction and coordination from a central nervous system. But how much centralization or decentralization is appropriate depends upon the situation. The degree of centralization that makes best use of the abilities of employees is the goal.

9. Scalar chain (line of authority). The scalar chain is the chain of command ranging from the top executive to the lowest ranks. Adhering to the chain of command helps implement unity of direction, but sometimes the chain is too long, and better communications and better decisions can result from two or more department heads solving problems directly rather than referring them up the chain until a common superior is reached.

10. Order. Both equipment and people must be well chosen, well placed, and well organized for a smooth-running organization.

11. Equity. Kindliness and justice will encourage employees to work well and be loyal.

12. Stability of tenure of personnel. Changes in employee assignments will be necessary, but if they occur too frequently they can damage morale and efficiency.

13. Initiative. Thinking through a plan and carrying it out successfully can be deeply satisfying. Managers should set aside personal vanity and encourage employees to do this as much as possible.

14. Esprit de corps. Build teamwork.

1. Dwell on the importance of each principle in the work of a manager. Try to exemplify your answer.

T E X T 3

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